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Abuses  in  Railroad  Transportation. 


}.  ..  ,  San  Francisco,  March  25,  1881. 

Hon.  Abram  S.  Hewitt,  Washington,  D.  C. 

Bear  Sir: 
The  abuses  in  the  system  of  overland  transportation 
between  the  Eastern  and  the  Pacific  States  have  all 
sprung  from  a  disregard  of  the  principle  of  impartiality 
which  should  govern  the  administration  of  all  public 
trusts.  The  companies  operating  the  overland  rail- 
roads have  arbitrarily  discriminated  between  individ- 
uals and  between  places,  as  their  own  interests  or 
those  of  their  managers  dictate.  By  this  method  they 
have  succeeded  in  monopolizing  the  business  of  trans- 
portation, and  levying  an  unjust  and,  doubtless,  un- 
lawful tax  on  all  commerce  between  the  communities 
concerped;  they  have  almost  destroyed  the  lines  of 
clipper  ships  which  formerly  did  so  large  a  share  of 
the  carrying;  and  thus,  besides  contributing  materially 
to  the  destruction  of  our  mercantile  marine,  have 
greatly  enhanced  the  cost  of  the  exportation  of  the 
surplus  wheat  crop  of  this  coast.  This  last  season  it 
has  cost  our  farmers  as  high  as  £4.  5s  per  ton  for  the 
carriage  of  their  wheat  to  England.  Two,  three,  and 
four  years  ago  £2.  10s  and  £3.  were  current  rates. 
Though  partly  due  to  increased  production,  this  killing 
enhancement  of  freights  is  directly  connected  with  the 
system  of  railroad  management,  which  deprives  ships 
coming  here  of  all  west-bound  cargo,  and  throws  the 
cost  of  the  whole  voyage  on  the  freight  hence  to 
Europe.  They  have  imposed  on  our  exports,  and  on 
those  of  the  Atlantic  States  which  have  commerce  with 
us,  an  arbitrary  ad  valorem  tariff,  adjusted  at  all  points 
to  the  maximum.  They  now  threaten  to  divide  our  com- 
aiunity  into  two  hostile  parties,  intercourse  between 


which  is  prohibited.  That  these  abuses  are  in  viola- 
tion of  law,  cannot,  I  think,  be  doubted;  but  from  our 
peculiar  dual  form  of  government  and  the  imperfection 
of  our  statutes,  no  adequate  remedy  for  them  exists. 
They  have  grown  up  under  imperfect  congressional 
legislation,  and  Congress  alone  can  provide  a  remedy. 
Before  proceeding  to  discuss  the  remedial  legislation 
needed,  we  must  examine  the  evil  itself  more  in  detail 
and  trace  its  origin. 

It  is  common  knowledge  that  in  every  business  cer- 
tain goods  require  the  speediest  transportation  obtain- 
able, and  in  the  carriage  of  others  time  is  of  little 
importance  compared  to  rate  of  freight.  In  the 
commerce  between  the  Eastern  and  the  Pacific 
States,  the  former  class  of  merchandise  naturally 
sought  transportation  by  rail,  the  latter  by  seia,  or  by 
the  isthmus.  As  every  dealer  must  keep  up  his  assort- 
ment or  lose  his  trade,  all  the  importers  naturally  had 
dealings  with  the  railroad  companies,  as  well  as  with 
the  ocean  and  isthmus  lines,  each  in  its  appropriate 
sphere.  In  the  summer  of  1878,  however,  the  Union 
Pacific  Railroad  Co.  (having  first  secured  the  control  of 
the  Panama  road)  announced  a  change  in  its  overland 
classification,  and  an  advance  in  freight  charges,  rang- 
ing from  fifty  to  one  hundred  per  cent,  over  those  pre- 
viously in  force,  thus  effectually  forbidding  all  impor- 
tations under  its  published  tariiff.  At  the  same 
time  our  merchants  were  waited  on  by  its  freight 
agent,  and  informed  that  by  contracting  to .  give  all 
their  freight  of  every  kind  to  the  railroad  company, 
they  would  not  only  escape  the  excessive  charges  of 
the  new  tariff,  but  even  secure  a  slight  reduction  from 
the  old  rates.  Had  the  mercantile  community  been 
united,  thei  exaction  of  these  contracts  for  exclusive 
dealing  might  have  been  resisted;  but  the  company 
had  rightly  calculated'  on  their  want  of  union  and  pre- 
paration and  the  influence  of  business  rivalry  among 
them.  Possibly  those  who  first  accepted  the  new  con- 
tracts secured,  or  were  promised,  some  special  favors 
or  advantages.     However    this  may   be,   some  were 


[3] 


found  to  lead  in  the  movement  and  accept  them. 
Each  one  who  did  so  rendered  it  more  difficult  for  the 
others  to  hold  out;  for  the  man  who  refused  foresaw 
that  he  would  not  only  have  to  pay  on  his  fine  goods 
double  or  treble  the  rates  paid  by  his  more  compliant 
rivals  in  business,  but  also  be  exposed  to  invidious 
personal  discrimination  in  rapidity  of  transport 
and  usual  accommodations  in  the  way  of  shipment, 
forwarding  and  delivery — discriminations  destructive 
to  his  business,  easily  practiced,  difficult  of  proof,  and, 
if  proved,  without  adequate  remedy.  One  by  one  at 
first,  then  in  larger  numbers,  and  finally  almost  in  a 
.body,  the  importers  gave  way  and  signed  the  contracts. 
The  companies  were  very  civil;  the  contracts  were 
open  to  all  alike,  and  were  not  at  first  very  rigidly 
interpreted  or  strictly  enforced.  They  were  explained 
and  rather  accepted  as  a  legitimate  effort  to  compete 
with  the  ocean  and  isthmus  lines,  and  their  ultimate 
operation,  perhaps,  was  not  clearly  foreseen.  The 
following  year  renewals  of  them  were  proffered,  with 
clauses  a  little  more  stringent  as  to  rival  modes  of 
transportation;  and  in  each  succeeding  year  since,  the 
screw  has  been  turned  a  little  tighter.  The  penal 
clauses  of  two  former  years  are  set  forth  in  the  Nation 
of  December  8th,  1881,  which  I  enclose.  Those  in  the 
contracts  for  1882  are  as  follows: 

"In  consideration  of  the  guaranty  of  the  foregoing  specia^ 
"  rates  of  freight,  the  second  party  has  covenanted  and  agreed, 
"  and  does  hereby  covenant  and  agree  to  ship  or  caused  to  be 
**  shipped  by  way  of  the  railroads  owned  or  operated  by  the  first 
**  parties,  and  such  other  connecting  railroads  as  may  be  desig- 
•*  nated  from  time  to  time  by  the  said  first  parties,  all  the  goods, 
**  wares  and  merchandise  handled  by  said  second  party, 
**  which  may  or  shall  be  purchased  in  or  obtained  from  any 
**  point  in  the  United  States  or  Canadas,  east  of  the  meridian  of 
**  Omaha  during  the  term  of  this  contract,  for  sale  or  use  on  the 
**  Pacific  Coast,  whether  such  goods  are  shipped  in  the  name  or 
**  for  account  of  said  second  party  or  otherwise. 

**  It  is  mutually  understood  and  declared  that  the  object  of 
**  this  agreement  is  to  secure  for  and  give  to  the  first  parties  the 
"  transportation  of  all  goods  handled  by  said  second  party, 
**  which  may  be  shipped  from  the  Eastern  States  and  Canadas  to 
**  San  Francisco,  or  other  port  or  point  of  distrubution  on  the 


[41 

**  Pacific  Coast  during  the  term  of  this  coDtract.  Also,  that  said 
**  seci  Dd  party  is  able  to  control  the  matter  and  direct  the  manner 
"  of  shipping  said  goods,  and  that  in  the  event  of  any  portion  of 
**  said  goods,  being  diverted  from  the  routes,  by  which  it  is  herein 
**  agreed  they  shall  be  shipped,  such  diversion  shall  be  construed 
'*  as,  and  held  to  be,  prima  facie  evidence  of  default  in  the  per- 
**  formance  of  this  agreement  by  said  second  party;  and  't  shall 
**  then  be  optional  with  said  first  parties  to  annul  the  agreement, 
**.or  to  collect  as  liquidated  damages  a  sum  equivalent  to  the 
"  charges  said  goods  would  have  been  subject  to  if  shipped  by 
"rail  in  accordance  with  the  terms  of  this  agreement. 

"  It  is  also  mutually  understood  and  particularly  agreed  that 
*•  the  special  rates  of  freight  herein  provided  are  for  the  sole 
**  use  and  benefit  of  the  second  party,  and  that  said  second 
**  party  shall  not  allow  the  use  of  its  name  or  shipping  marks,  in 
•*  any  way  or  by  any  other  party  or  parties,  which  shall  procure 
**  for  said  other  party  or  parties  the  benefit  of  said  special  rates 
'"  of  freight;  and  it  is  expressly  stipulated  that  in  case  said 
"  second  party  shall  supply,  by  sale  or  otherwise,  any  party  or 
•*  parties  who  are  known  to  handle  goods  which  may  have  been 
-**  shipped  via  any  route  not  herein  designated,  from  the  terri- 
**  tory  east  of  the  meridian  of  Omaha  to  any  point  or  points  on 
'**  the  Pacific  Coast  of  the  United  States,  or  to  British  Columbia, 
**  during  the  term  of  this  agreement,  said  second  party  shall 
,**  pay  or  cause  to  be  paid  to  said  first  parties  freight  at  the 
**  regular  tariff  rates  on  the  goods  so  supplied,  in  default  of 
•*  which  the  first  parties  shall  have  the  right,  at  their  option,  to 
**  cancel  and  annul  this  agreement.  O 

.  *  *  *  *  ♦  *  * 

\  **  It  is  further  mutually  understood  and  agreed,  that  in  case 
"  the  first  parties  phall  at  any  time  have  reason  to  believe  that 
**  the  second  party  has  violated  or  disregarded  the  terms  of  this 
•*  agreement,  said  first  parties  shall  have  the  right  to  examine 
**  the  books  and  papers  of  the  second  party,  in  so  far  as  may  be 
**  necessary  to  determine  the  truth  of  the  matter  in  question. 

**  It  is  further  mutually  understood  and  agreed  that  all  freight 
"  shipped  under  or  covered  by  this  agreement  shall  be  truly  and 
*'  accurately  described  b^  the  use  of  definite,  not  general,  terms, 
"  and,  as  far  as  true  and  practicable,  by  terms  used  in  the  tariff 
**  of  the  first  parties  hereto,  so  that  the  proper  rate  to  be  applied 
•'  may  be  determined  without  inspection  of  the  contents  of  the 
•*  packages  by  the  carrier;  and  that  in  cases  of  doubt  as  to  the 
•*  exact  nature  of  the  contents  of  any  package  of  freight  con- 
"  signed  to  said  second  party,  the  carriers  shall  have,  and  are 
**  hereby  accorded,  the  right  either  to  open  said  packages  or  to 
**  inspect  the  original  invoices  of  purchase  for  the  contents  of 
'*  said  packages,  in  order  to  determine  the  proper  rate  to  be 
•*  chargj-d  tliertion;  and  that  in  case  it  shall  be  found  that  any 
'*  such  package  or  packages  contain  freight  of  a  higher  class  than 


[5] 

*'  that  specified  by  shippers  of  same,  the  nature  of  the  j^foods 
**  having  been  wilfully  misrepresented  for  the  purpose  of  obtain- 
**  ing  a  lower  rate  upon  the  same  than  that  which  would  have 
"  been  obtained  under  this  agreement,  had  the  goods  been  truly 
**  described,  the  carriers  shall  have,  and  are  hereby  accorded,  the 
**  right  to  charge  upon  such  package  or  packages  so  mis- 
**  described,  double  the  regular  tariff  rate  upon  same.'* 

♦  ♦  *  *  *  *  * 

I  beg  you  to  read  these  clauses  thoughtfully  and 
realize  their  full  meaning  and  inevitable  effect.  They 
divide  this  community  sharply  into  two  classes,  viz: 
those  who  *' handle/'  i.  e.  buy,  sell;  forward  or  consume 
goods  which  have  come  here  from  the  East  otherwise 
than  by  rail,  and  those  who  do  not.  If  one  of  the 
former  class  applies  to  purchase  goods  from  one  of  the 
latter,  he  may  perhaps,  in  an  isolated  case,  obtain  them, 
but  he  must  pay  a  price  much  above  the  market  value, 
because  the  seller  has  contracted  and  will  be  called  on 
to  pay  the  open  tariff  freight  on  them,  as  a  penalty  for 
selling  to  a  customer  of  an  obnoxious  class;  but  if  the  request 
be  repeated,  he  is  sure  in  the  end,  and  quite  likely  at 
the  outset,  to  be  told  "  we  dare  not  sell  to  you  lest  our 
railroad  contract  be  revoked,  or  a  renewal  of  it  be  re- 
fused us."  That  is  the  precise  meaning  and  intention! 
Absolute  non-intercourse  in  business  with  any  who, 
directly  or  indirectly,  use  other  means  of  transporta- 
tion, is  the  price  exacted  from  the  merchants  of  this 
coast  for  liberty  to  have  their  merchandise  carried  over 
a  national  highway,  built  and  equipped  wholly  with 
means  furnished  by  the  public!  How  long  social 
relations  can  survive  an  enforced  cessation  of  business 
intercourse,  accompanied,  as  this  must  be,  by  a  sense 
of  humiliation  on  the  one  side  and  wrong  on  the  other, 
may  be  conjectured ;  but  what  jealousies,  social  enmi- 
ties or  other  evil  consequences  may  ensue  is  of  no 
consequence.  The  man  whose  freight  is  transported 
by  the  overland  lailroad  companies  must  neither  buy 
nor  sell  with  one  who,  directly  or  indirectly,  counte- 
nances any  other  mode  of  transportation.  He  has 
become  a  slave  of  the  rail. 


[6] 

Possibly  these  suggestions  may  appear  exaggerated; 
it  may  be  thought  that  such  shocking  conditions  are 
not  intended  to  be  and  will  not  be  enforced,  or  that  it 
will  be  impossible  to  discover  violations.  Even  if  this 
were  true,  it  is  no  answer,  for  the  contracts  are  equally 
objectionable  in  any  event.  But  it  is  not  true;  they 
are  intended  to  be  enforced.  The  intention  is  dis- 
tinctly announced.  Nay,  becBuse  they  are  henceforth 
to  be  strictly  enforced,  contracts  are  no  longer  open 
to  all  dealers  alike;  only  the  large  houses  are  now 
allowed  the  privilege  of  taking  them,  the  reason 
assigned  being  that  othervnse  the  company  would  have  to 
maintain  too  large  a  corps  of  spies,  ..A)   i^r^:. 

Besides,  if  not  to  be  enforced,  why  insert  them? 
What  object  to  be  gained  by  a  gratuitous  and  offensive 
imputation  of  habitual  bad  faith  on  the  part  of  their 
customers,  only  to  be  guarded  against  by  stringent 
conventional  rules  of  evidence,  discovery  of  books 
atid  papers,  based  on  suspicion,  and  penalties  inflicted 
at  discretion  of  the  complaining  party  ?  They  are 
to  be  enforced,  and  indeed  must  be,  or  the  whole 
contract  system  must  break  down.  Every  contract  of 
the  kind,  like  every  penal  enactment,  must  provide 
against  evasion  or  become  wholly  inefficient.  If  buy- 
ing and  selling  between  the  two  classes  spoken  of  were 
permitted,  evasion  of  the  contracts  would  be  easy  and 
would  soon  become  general,  because  tolerated. 

With  all  of  these  humiliating  conditions,  however, 
the  contracts  have  been  generally  accepted,  by  the 
mercantile  community.  Not  that  they  are  willing  to 
be  so  oppressed  or  unconscious  of  the  wrong  inflicted 
on  them,  but  having  once  given  entrance  to  the  nefari- 
ous system,  they  find  themselves  powerless  to  resist 
further  encroachment,  and  must  accede  to  whatever 
the  railroad  companies  see  fit  to  deinand.  So  true  it 
is: 

"Things bad  begun  make  strong  themselves  by  ill." 

Conversing  with  two  gentlemen  the  other  day,  I  said 
to  one  of  them,  an  extensive  merchant:     **  I  suppose 


[7] 

you  have  taken  one  of  these  new  railroad  contracts?" 
^y  Oh  yes,"  said  he,  *'  it  is  either  thai  or  go  out  of  business; 
"  we  have  no  choice ;  that  is  the  way  I  look  at  it." 
This  but  expresses  the  universal  sentiment.  And  not 
only  have  they  no  choice  as  to  accepting  these  contracts, 
but  they  must  not  even  murmur  or  express  dissatisfac- 
tion at  them.  No  man  in  business  dares  speak  out 
what  he  silently  thinks  on  the  subject;  he  knows  too 
well  the  extent  to  which  he  is  in  the  power  of  the 
companies.  Even  if  he  should  escape  the  arbitrary 
revocation  of  his  present  contract,  he  feels  certain 
that  he  will  be  refused  a  renewal  next  January,  and 
must  then  affront  the  alternative  of  "going  out  of 
business."  He  cannot  even  fall  back  on  ocean  and 
isthmus  transportation.  The  clipper  lines  round  the 
Horn  have  been  one  by  one  rooted  out,  by  the  con- 
tract system,  and  the  isthmus  rates  are  controlled  by 
the  overland  companies,  as  their  contracts  expressly 
declare.  If  a  petition  to  Congress  for  relief  from  this 
oppression  were  circulated  here  to-morrow,  it  is  safe 
to  say  that  not  ten,  and  probably  not  even  one  of 
those  who  most  acutely  feel  it,  and  most  denounce  it 
in  private  to  each  other — certainly  none  who  hold  rail- 
road contracts  and  expect  to  remain  in  business — would 
be  willing  to  set  their  signatures  to  the  paper.  Nor 
are  they  to  be  blamed.  They  have  families,  property, 
creditors,  and  find  themselves,  without  conscious  fault 
on  their  own  part,  under  the  absolute  government 
of  a  combination  of  large  corporations  unrestrained 
by  any  law  but  the  interest  and  passions  of  their  man- 
agers.    The  penalty  for  revolt  would  be  destruction. 

The  evil  is  patent  and  monstrous,  and,  considering 
that  the  roads  were  wholly  built  and  equipped  with 
means  provided  by  Congress,  and  their  methods  of 
business  are  exclusively  under  its  control,  the  duty 
of  providing  a  remedy  by  that  body  is  urgent. 

THE   REMEDY. 

A  congressional  schedule  of  rates  is  open  to  grave 
objections,  and,  from    its   inevitable    complexity,    is 


[8] 

probably  impracticable.  Congress  does  not  possess 
the  necessary  information  to  enact  a  rate  of  charges 
just  to  the  railroads  and  the  public.  To  confer  the 
power  of  fixing  charges  on  a  Board  of  commissioners 
is  objectionable  on  other  grounds,  and,  if  we  may  judge 
by  our  local  experience,  would  afford  no  actual  relief. 
General  legislation,  if  practicable,  is  much  to  be  pre- 
ferred. Its  justice  or  injustice  can  be  determined  on 
principle,  without  reference  to  confusing  details  of 
business  and  conflicting  interests  of  particular  parties. 
Hence,  too,  it  is  more  likely  to  unite  the  friends  of  re- 
form; and  as  its  merits  are  capable  of  popular  appre- 
ciation and  discussion,  a  recognition  of  its  justice  is 
more  likely  to  lead  to  its  adoption.  I  know  no  good 
reason  why  the  principles  which  should  govern  over- 
land rates  are  not  equally  applicable  to  all  inter-state 
railroad  transportation;  but  my  studies  having  been 
confined  to  the  former,  I  address  myself  here  to  them 
alone.  That  general  rules  can  be  devised  for  them,  just 
in  themselves,  simple  and  easily  enforced,  and  which 
will  remedy  the  abuses  complained  of,  I  have  no  doubt; 
and  as  the  overland  roads  were  wholly  built  and 
equipped  with  means  furnished  by  the  public,  and  are 
creatures  of  an  act  of  congress,  there  can  be  no 
constitutional  objection  to  congressional  regulation 
of  their  methods.  In  fact,  no  authority  but  Congress 
can  regulate  them. 

I  admit,  in  limine,  the  private  ownership  of  the  roads, 
and  that  corporate  property  is  as  much  under  the  pro- 
tection of  the  Constitution  as  that  of  individuals.  But 
the  roads  through  private  property  are  not  the  less 
public  highways,  and,  as  such,  open  by  law  to  the  use 
of  all  citizens  on  equal  terms.  Congress,  in  furnishing 
means  for  their  construction,  never  designed  that  their 
use  should  be  limited  to  any  particular  set  of  men,  or 
that  any  preferences  or  partialities  should  be  shown  to 
one  over  another.  There  is  no  word  in  the  Pacific 
Railroad  Acts  to  sanction  such  a  claim,  and  it  is  plain 
nothing  of  the  sort  was  designed.  The  abuses  in 
the  system  have  all  sprung  from  a  disregard  of  this 


[9] 

principle;  and  in  demanding  conformity  to  it,  we  are 
strictly  within  the  lines  of  simple  justice. 

The  basis  whereon  the  whole  of  this  system  has  been 
built  up  is  the  artificial  classification  of  merchandise 
adopted  by  the  railroad  companies,  and  the  abuse  of 
the  liberty,  incident  to  corporate  existence,  to  make 
private  contracts.  Abolish  the  present  absurd  classifi- 
cation and  substitute  one  founded  on  justice  and  good 
sense;  require  the  companies  to  make  public  their 
rates  of  charge,  and  forbid  all  deviation  under  any 
pretext,  and  you  will  have  enacted  regulations  which, 
if  enforced,  will  tear  up  the  whole  wicked  system 
by  the  roots. 

There  is  another  abuse,  formerly  very  rife  here, 
though  to  what  extent  now  practiced  I  am  unable  to 
say.  It  is  liable  at  any  time  to  recur,  and  should  be 
dealt  with  in  any  reformatory  legislation.  I  mean  dis- 
crimination between  places.  This  is,  in  some  aspects, 
"  a  more  serious  evil  than  discrimination  between 
"  persons,  for  it  affects  whole  communities,  and  may 
"  involve  in  its  consequences  the  ruin  of  individuals 
"  and  families,  and  inflict  injury  on  thousands  who 
"  have  no  direct  relations  with  railroads,  but  whose 
"property  is  rendered  valueless,  and  the  fruits  of 
"whose  industry  is  destroyed  by  the  decay  of  their 
"  place  of  residence,  caused  by  adverse  railroad  dis- 
"  crimination.^' 

Want  of  space  forbids  me  to  enlarge  on  this 
or  refer  to  instances.  There  are,  unfortunately, 
plenty  of  them  that  are  notorious,  and  your  business 
experience  must  have  drawn  your  attention  to  such. 
So  far  as  the  overland  roads  are  concerned,  they  are 
easily  dealt  with  by  legislation  which  wnll  require 
transportation  charges  to  be  based  on  the  cost  of  the 
service.  That  is  the  common  law  rule,  and  is  the 
only  rational  or  philosophical  basis  either  of  the 
classification  of  goods  or  the  rate  of  charges.  Let  us 
take  these  separately. 


[10] 

L — AS  TO  CLASSIFICATION. 

Two  persons  present  themselves  simultaneously  at 
the  same  railroad  station,  offering  goods  to  be  trans- 
ported. The  weight  of  each  lot  is  the  same,  the  space 
occupied  just  equal,  and  the  places  of  shipment  and 
destination  are  also  identical.  What  just  reason  can 
be  rendere^d  why  the  freight  of  one  lot  should  be  dou- 
ble or  treble  that  of  the  other  ?  Does  the  mechanical 
engine  which  draws  the  train,  the  inanimate  fuel  which 
furnishes  the  power,  the  engineer,  fireman,  conductor 
or  brakeman,  who  do  the  work,  or  the  clerk  or  book- 
keeper who  enters  or  way-bills  the  goods,  know  of  any 
distinction  between  the  one  and  the  other  ?  Are  any 
of  these  employees  paid  higher  wages  for  attending  to 
the  one  package  or  the  other  ?  Is  there  any — even 
the  slightest — difference  in  the  cost  of  performing  the 
service?  None  of  these!  Why,  then,  this  minute 
and  vexatious  classification  of  goods,  and  the  search- 
ing demand  of  the  carriers  for  a  precise  specification 
of  the  contents  of  the  package  before  declaring  the  rate 
of  freight  ?  Why,  for  instance,  is  one  rate  demanded 
on  printing  paper  and  another  on  books  in  sheets  ? 
Why  is  the  freight  on  ores  of  equal  weight  and  identi- 
cal appearance  from  the  same  mine  put  at  a  certain 
percentage  of  their  assay  value  ?  The  companies'  rea- 
son is  of  course  obvious  enough.  Their  charges  are 
adjusted  on  the  basis  of  a  percentage  of  their  cus- 
tomers' profits,  and  this,  the  largest  that  the  trade 
will  bear.  They  speak  in  their  contracts*  of  their 
tariff,  and  very  rightly,  for  it  is  as  much  a  tariff  as 
any  ever  enacted  by  Congress.  It  is  a  tariff  on 
imports  from  one  State  to  another.  A  tariff  for 
revenue,  but  which  (as  recently  shown  in  the  case 
of  sugar)  is  occasionally,  and  for  a  consideration, 
made  protective.  Such  a  tariff  Congress  itself  has  no 
power  to  enact,  and  if  it  had,  it  would  never  seriously 
entertain  the  suggestion.  Yet  these  companies  have 
enacted  it,  and  by  its  means  have  been  enabled  to 
constitute  themselves  intrusive  partners  in  every  man's 


HI] 

business,  and,  without  sharing  risk  or  contributing 
capital,  to  appropriate  the  largest  share  of  the  profits, 
as  a  tax  in  advance  of  sale  or  consumption! 

The  system  is  defended  at  times  on  the  plea  of  en- 
couragement to  feeble  or  languishing  industries.  We 
are  told,  ex.  gr.j  that  ore  of  a  high  grade  must  pay  a 
high  freight,  else  the  owners  of  poor  mines  would  not 
be  able  to  get  their  ores  to  market.  Peter,  in  other 
words,  must  be  robbed  to  pay  Paul.  The  pretext  is  as 
destitute  of  truth  as  it  is  flimsy — a  mere  excuse  for  high 
charges,  when  it  is  thought  the  trade  can  bear  them. 
When  a  railroad  company  carries  ores  worth  twenty- 
five  dollars  per  ton  for  five  dollars,  they  do  so  because 
that  sum  remunerates  them  for  the  service,  their 
charge  of  fifty  dollars  for  carrying  a  ton  of  like  ore 
worth  ten  times  as  much,  is  to  the  extent  of  the  excess 
a  mere  extortion.  So,  when  a  higher  or  even  as  high 
a  charge  is  made,  for  carrying  goods  a  portion  of  the, 
way,  as  for  the  whole  way,  the  injustice  is  so  patent 
that  no  amount  of  argument  can  obscure  it.  Outside  of 
the  cupidity  of  the  companies,  and  their  power  to  exact, 
I  have  never  heard  any  plausible  reason  assigned  for 
these  discriminative  rates  of  charge,  except  the 
carrier's  common  law  liability  as  an  insurer.  But  every 
one  knows  that  this  liability  is  a  myth.  It  has  no 
practical  value,  is  released  in  advance  ninety-nine  times 
in  a  hundred,  and  had  better  be  abolished  by  law  as  a 
mere  excuse  for  unjust  exactions.  It  arose  in  a  con- 
dition of  society  wholly  diflferent  from  ours  j  the 
reasons  oA  which  it  was  founded  have  long  since 
ceased  to  exist,  and  there  is  no  reason  why  it  should 
longer  continue.  Remove  it,  and  no  shadow  of  excuse 
is  left  for  artificial  classification. 

There  is  a  natural  and  philosophical  basis  for  classi- 
fication. It  was  in  universal  use  before  railroads 
monopolized  transportation,  and  still  prevails  on  water 
routes,  and  others  open  to  competition,  and  it  is  sim- 
plicity itself;  namely,  weight  and  measurement. 

These  two  classes,  namely,  weight  goods  and  meas- 
urement goods,  comprise  the  great  mass  of  merchan- 


[12]  , 

dise  which  is  the  subject  of  transportation.  The  few 
articles  which  do  not  come  properly  within  either,*  may 
constitute  a  separate  and  third  class.  Let  us  get  back, 
then,  to  the  old  classification,  adopt  a  unit  of  weight 
and  a  unit  of  measurement,  to  be  applied  at  the  option 
of  the  carrier  to  all  goods,  save  those  included  in  the 
limited  and  exceptional  category  referred  to.  Require 
the  companies  to  adopt  and  publish  their  rates  on 
these  units  or  their  multiples,  open  to  all  shippers  on 
equal  terms,  and  forbid  all  special  contracts,  special 
rates,  rebates  or  peculiar  favors,  and  you  will  at  once 
get  clear  of  all  discrimination  between  individuals. 
Nor  will  this  change  materially  enhance  the  cost  of 
transportation.  It  is  demonstrable,  though  space  does 
not  permit  its  present  discussion,  that  their  own  interest 
will  compel  the  companies  to  carry  for  the  lowest  rates 
at  which  the  business  can  profitably  be  done. 

II. — AS  TO  DISCRIMINATION  BETWEEN  PLACES. 

The  cost  of  transportation  by  rail  is  evidently  made 
up  of  three  items,  viz: 

1.  The  fixed  expenses  of  the  company,  as  salaries 
of  officers  and  employees,  interest  on  capital,  rents, 
taxes,  insurance  and  similar  outgo. 

2.  The  cost  of  receiving,  loading,  way-billing,  re- 
porting, unloading,  delivery  and  the  like. 

S.     The  cost  of  movement. 

The  first  of  these  is  practically  a  constant  quantity; 
the  second  depends  on  the  volume  of  goods  handled, 
but  is  unaffected  by  the  distance  they  are  moved ;  the 
third  varies  in  direct  proportion  to  distance  traversed. 
Of  each  of  these  three  items  of  cost  each  package 
should  bear  its  just  proportion,  and  each  should  pay 
the  carrier  a  reasonable  percentage  of  profit.  The 
pharge  for  transporting  a  given  lot  of  merchandise 
should  therefore  be  made  up  of  two  sums;  the  one  an 


*  Ex.  gr.  Living  animals,  explosives  and  inflaraables, 
macbinery  or  its  parts  of  extraordinary  size,  form  or  weight,  as 
the  shaft  of  a  steamer,  mast  of  a  ship,  or  the  like. 


[13] 

amount  fixed  without  regard  to  the  distance  to  be 
traversed,  but  varying  with  the  quantity  of  the  goods, 
the  other  variable  and  proportioned  to  quantity  and 
distance.  In  other  words,  a  terminal  and  a  movement 
charge. 

The  variation  in  cost  attending  the  handling  of  small 
and  large  lots  of  merchandise  may  be  compensated  by 
allowing  the  terminal  charge  to  vary  according  both 
to  the  quantity  of  goods  and  the  number  of  packages. 
There  should  also  be  a  wholesale  as  well  as  a  retail 
unit,  viz,  the  carload  lot  and  the  ton.  Whatever  these 
rates  may  be  for  either,  they  should  be  made  public 
and  be  the  same  to  all  comers. 

There  are  numerous  other  considerations  which 
inight  be  adduced  bearing  on  the  questions  I  have  here 
endeavored  to  discuss,  but  the  necessity  of  keeping 
this  communication  within  reasonable  bounds  forbids 
adverting  to  them.  They  all  lead  up  to  these  cardinal 
principles,  a  unit  of  weight,  a  unit  of  measurement,  a 
terminal  charge  and  a  rate  per  mile,  published  rates 
and  no  deviation.  These  apply  to  and  cover  all  ordinary 
merchandise.  Where  articles  transported,  from  their 
peculiar  form  or  character,  excessive  size  or  weight  or 
inherent  qualities,  do  not  fairly  come  within  the  reason 
of  the  rule,  they  should  be  excepted;  such  cases  are 
of  rare  occurrence  and  do  not  affect  the  general  com- 
merce of  the  country;  they  may  for  the  present,  at  least, 
be  safely  left  to  private  contract. 

ra. — ENFORCEMENT  OF  THESE  PROVISIONS. 

It  will  not  do  to  leave  the  enforcement  of  these  pro- 
visions to  the  action  of  individuals.  Every  dealer  with 
these  large  companies  is  compelled  by  circumstances 
to  put  himself  so  much  in  their  power  in  his  every 
day  transactions  with  them,  that,  to  use  an  ordinary 
phrase,  he  cannot  afford  to  quarrel  with  them. 

This  fact  experience  has  abundantly  proved,  and  the 
enforcement  of  the  law  must  therefore  be  entrusted  to 


114] 

agents  of  the  public.  A  board  of  commissioners  should 
be  appointed  to  whom  all  transactions  and  dealings  of 
the  companies  should  be  constantly  and  systematically 
reported.  They  should  have,  for  the  purpose  of  inves- 
tigation, all  the  powers  of  a  court  or  congressional 
committee  and  should  be  charged  with  the  duty  of 
prosecuting  for  all  violations  of  the  law;  penalties 
should  be  denounced  for  its  infraction  sufficiently 
severe  to  ensure  obedience.  The  Board  should  report 
annually  or  oftener  to  Congress  or  to  the  President. 

I  have  drawn   portions  of  a  bill  embodying  these 
ideas  and  submit  the  same  to  your  consideration. 
Tours  respectfully 

JOHN  T.DOYLE. 


/ 


/ 


5    J10  0--J 


